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Effort to reform telecom laws met major disconnect

A 20-month process to reform the state’s decades-old telecommunications laws ended in political gridlock and inter-party disagreements among Senate Democrats over how to fund broadband investments in rural parts of the state.

The goal of the 71-page Senate Bill 157 was to phase out the state’s High Cost Support Mechanism, which subsidizes the cost of constructing landlines and other infrastructure related to providing phone and Internet services in rural parts of the state, while also modernizing telecommunications laws that have been in place for over two decades. It was once billed as the “most important” bill of the legislative session and was heralded by members of both parties at a large press conference in the foyer of the state Capitol building earlier this year.

But over the life of the discussions and the bill itself, which was introduced on March 8 by Sens. Mark Scheffel, R-Parker, and Lois Tochtrop, D-Thornton, concerns over how much money to place in a fund for broadband investments, as well as apprehension by some unions and corporate concerns, took over. Ultimately the bill sponsors asked to kill the much ballyhooed bill on May 4, just days before the regular legislative session came to an end.

The biggest concern was over the broadband fund. The bill would have phased-out a 2.9 percent surcharge on ratepayers’ bills by 2025, using 50 percent of the savings from the phase-out for reimbursing ratepayers, while placing the other 50 percent of savings in a fund managed by the Governor’s Office of Information Technology to fund broadband investments in rural parts of the state. Sponsors had started with an estimate of $5 million for the fund, but critics said the number was too low, asking for an agreement on $250 million for the fund.

“It pretty much became a broadband bill somehow,” said Tochtrop, who acknowledged several disagreements within her own caucus over how to evolve the bill. “The problem there was when we were talking about high cost funding, people felt it should all go back to the ratepayers, which was the Republican side of the aisle, and Democrats thought the high cost fund, what was not used, should go to broadband, and it became a very big disconnect.”

Tochtrop found herself butting heads with Senate Majority Leader John Morse, D-Colorado Springs, who had allowed the bill to languish on the calendar while discussions took place over how to fund the broadband development fund. It took over a month for the bill to make it from the Senate Business, Labor and Technology Committee on March 21 to Appropriations on May 4, when sponsors finally asked to kill the legislation. Morse said there were no political games taking place. He said simply that there were concerns that needed to be addressed before the bill advanced.

“It wasn’t Democratic leadership, it was the Democratic caucus, and it wasn’t 100 percent, but it was 17 out of 20 who empowered me after that bill came out to try to get it to a point where it made sense,” said Morse.

He shrugs off accusations that the caucus caved to a strategic lobbying effort employed by Monroe, La.-based CenturyLink, which would have felt the brunt of the implications. The telecom provider receives the lion’s share of the subsidies that would have been phased out, equating to about $50-$60 million. As a result, the company and its supporters used e-mails, robocalls and lobbyists to have the bill killed. Assisting them in their efforts was Communications Workers of America Local 7777, which argued that as many as 700 jobs employed by CenturyLink would have been lost as a result of the bill.

“We saw it as protecting consumers and our members because this bill would have taken out anywhere between 600-700 jobs of Communications Workers of America, and those are good paying jobs, they have health care, they have benefits,” said Sheila Lieder, legislative political director for Local 7777, who along with her union attempted to get sponsors in the last days to include amendments that would have limited some of the subsidy reductions for CenturyLink.

The bill would have eliminated the subsidy for carriers in areas of the state where there are five or more competitors; in areas without five or more competitors, the subsidy would have stayed. An exemption would have been made for providers with less than 75,000 access lines.

Because of the exemption, CenturyLink, which is the largest provider of rural telecommunications services in the state, would have seen the subsidy go away, while an estimated $7 million worth of subsidies would have remained for carriers that would have still qualified. Critics felt the bill created an unfair advantage for
smaller carriers like Viaero Wireless and other smaller members of the Colorado Telecommunications Association.

Morse acknowledged the corporate and union pressure, but says his concerns had more to do with equity than with lobbying efforts. “There were deliberate payoffs,” said the majority leader. “They wanted to pay out rural telephone companies, and then just went after CenturyLink.”

But Scheffel has a different take, arguing that Morse buckled to political pressure within his own caucus, ignoring the compromises and agreements that Tochtrop, Morse’s own assistant majority leader, was working on.

“When folks asked me as the story unfolded, ‘Hey, what about Senate leadership,’ my response was, ‘Yeah, I’ve been working with Senate leadership for 20 months now, and her name was Lois Tochtrop,’” said Scheffel.
Assuming Senate Democrats maintain a majority in the Senate next year, and with Senate President Brandon Shaffer, D-Longmont, exiting the legislature, Morse stands a good chance of being elected the new Senate president. For that reason, Scheffel is not optimistic about the outcome of the bill if it is to be introduced again next year.

“It’s no secret that Sen. Morse was front and center in his role as majority leader in holding this thing up, so depending on how the elections turn out, he very well may continue to be in that spot, or may find himself in a more powerful position,” said Scheffel.

Morse, however, said his commitment is to finding a fair compromise. “I still believe in the vision,” he said.

Tochtrop says there is no “bad blood” between her and Morse following the gridlock, but she does acknowledge some tense moments throughout the process. “I was extremely frustrated,” she said. “We got it out of my committee, but when we tried to get it in appropriations, it just wouldn’t go…”

“It was just a good political move,” she continued, describing the bill. “We are lowering your phone bills, while modernizing telecom and bringing it up to the 21st Century, and we could not get there, and it was held up because of not getting a meeting of the minds.”

Industry insiders who supported the bill, including AT&T Colorado, hope that lawmakers take up the issue again next year mostly to modernize outdated telecom laws that need to evolve along with growing technology. Some encourage the Public Utilities Commission to also look at addressing some of the reform needs.

Bill Soards, president of AT&T Colorado, says the laws need to be updated now, and then again every few years.

“It’s been so long since the Legislature has addressed this subject matter that every year there is a delay, the problems continue to grow and the task gets bigger,” he lamented.

But Jim Campbell, regional vice president for legislative affairs for CenturyLink, says lawmakers should not rush into a hastily written policy simply to tell constituents that they are working to update archaic telecom laws.

“The goal of the bill is good,” he said. “But people took a look at the words of the bill, and the words exposed that kind of legislative discrimination amongst rural subscribers.”